May 12 2010
Greece’s “financial meltdown” has again brought into question the firmly held Keynesian belief that you can spend your way to prosperity. According to a recent Wall Street Journal editorial (5/10/10), “Greek politicians in particular lived beyond their means … Europe isn’t experiencing a currency crisis. It’s a debt crisis driven by overborrowing, large and inefficient government, and insufficient economic growth.”
Europe’s crisis suggests that big government policies being enacted in the U.S. may delay the return to prosperity here too.
Over the last 200 years, prosperity is the hallmark of every Maslow Window from Apollo all the way back to Lewis and Clark, and is expected to drive the approach to ebullience near 2015. It’s clear that prosperity enhances the financial feasibility of typical macro-engineering projects (e.g., Panama Canal; Apollo). What’s not so obvious is that their political feasibility is momentarily ensured by affluence-induced ebullience that elevates many in society to higher states of Maslow’s hierarchy. And the large international audiences typically riveted by great explorations — e.g., the still-famous, mid-19th century greeting of Henry Stanley in central Africa, “Dr. Livingstone I presume?” — are enabled largely by the same effect.
Prosperity Is a Technological Imperative
The connection between prosperity and superpower status was emphasized recently by Max Boot, senior fellow at the Council on Foreign Relations (WSJ, 3/25/10),
When Europeans after World War II chose to skimp on defense and spend lavishly on social welfare, they abdicated their claims to great power status. That worked out well for them because their security was subsidized by the U.S..
But what happens if the U.S. switches spending from defense to social welfare? Who will protect what used to be known as the “Free World”? … it will be increasingly hard to be globocop and nanny state at the same time.
Harvard economist Benjamin Friedman (2005) expands the point to explicitly include space, “A rising average income allows a country to project its national interest abroad, or send a man to the Moon.”
Political scientist and blogger Thomas Barnett likes to refer to the U.S. as the Leviathan. In 2009 we spent as much on defense ($ 660 B) as the rest of the world combined. But major entitlement programs currently cost 35% of GNP, about twice that of defense.
It takes exceptional mental prowess to remember when U.S. entitlement spending initially exceeded defense (in 1976). And Social Security, Medicare, and Medicaid have expanded “dramatically” since then. ObamaCare will accelerate the trend.
Prosperity is a Moral Imperative
In his monumental book, The Moral Consequences of Economic Growth (2005), Harvard economics professor Benjamin Friedman presents the case for prosperity as a moral imperative.
Even in America, I believe, the quality of our democracy -– more fundamentally, the moral character of American society – is similarly at risk.
He shows that economic growth, rather than just the level of living standards is the key to political and social liberalization around the world as well as in the U.S.. Merely being rich is no protection against society’s retreat into rigidity and intolerance.
Periods of economic expansion in America and elsewhere, during which most citizens had reason to be optimistic, have also witnessed greater openness, tolerance, and democracy. To repeat: such advances occur for many reasons. But the effect of economic growth versus stagnation is an important and often central part of the story.
Friedman’s comments mirror the general trends of the long economic wave which peaked most recently in the late 1960s, declined into the 1990s, and should ignite another Kennedy-style long boom by 2015:
The central economic question for the United States at the outset of the twenty-first century is whether the nation in the generation ahead will again achieve increasing prosperity, as in the decades following World War II, or lapse back into the stagnation of living standards for the majority of our citizens that persisted from the early 1970s until the early 1990s … But even the prosperity … in the late 1990s bypassed large parts, in some important dimensions a clear majority, of the country’s citizens …
So for most people, it is persistent real growth in wages and low unemployment that trigger the twice-per-century Maslowian ebullience which momentarily creates broad public approval of great explorations and MEPs like Apollo in the 1960s — and the new international space age expected near 2015.
And in addition to its profound technological impact on society, prosperity is also a moral imperative that historically results in more openness, tolerance, and democracy thoughout the world.
Despite our current circumstances, there is every reason to believe that the 2015 Maslow Window will be the best of both worlds.